The Dow Jones Transportation Average ran up 2.7% to 6469 in midday trading Tuesday, the highest level seen since May 28. It is now set to surpass the June 18 closing high of 6358.56, which was the last peak before the end of the Federal Reserve policy meeting on June 19.

On that day, Fed Chairman Ben Bernanke spooked global markets by saying the Fed might start winding down asset purchases this year if the labor market continues to improve as expected.

Dow Jones Transportation Average

FactSet

Closing above 6358.56 would be technically significant. Jonathan Krinsky, chief technical market analyst at Miller Tabak, noted that was “the last failing rally high,” so getting above it “ends the pattern of lower highs” in place since the market started pulling back nearly two months ago.

It also starts a pattern of higher highs, which according to the century-old Dow Theory of market analysis is one of the defining characteristics of an uptrend. “It’s a favorable development [for the broader market], when you have one index making new highs,” Krinsky said. “The benefit of the doubt is to the upside.”

The next high for the Dow Transports to target is the May 20 record intraday high of 6568.41.

He said other recent favorable technical developments include the Russell 2000 index of small-capitalization stocks reaching all-time highs and cumulative advance-decline line for the S&P 500 breaking out to fresh highs.

Regarding the S&P 500, he said rising above the downtrend line starting at the May high and getting back above the previously broken uptrend line starting at the November 2012 lows are two positive technical developments this week.

Rising above 1655, which is roughly the June 18 intraday high, “would be a third positive,” Krinsky said. If that level breaks, the next “highs” to target are the May 21 all-time closing high of 1669.16 and the May 22 record intraday high of 1687.18.